8.  The first applicant, Centro Europa 7 S.r.l. (“the applicant company”), is a limited liability company operating in the television-broadcasting sector, with its registered office in Rome. The second applicant, Mr Francescantonio Di Stefano, is an Italian national who was born in 1953 and lives in Rome. He is the statutory representative of the applicant company.
9.  By a ministerial decree of 28 July 1999, the appropriate authorities granted Centro Europa 7 S.r.l. a licence for nationwide terrestrial television broadcasting in accordance with Law no. 249/1997 (see paragraphs 56-61 below), authorising it to install and operate an analogue television network. The licence specified that the applicant company was entitled to three frequencies covering 80% of national territory. As regards the allocation of the frequencies, the licence referred to the national frequency-allocation plan, adopted on 30 October 1998. It indicated that the installations should be brought into line with the requirements of the “assignment plan” (piano di assegnazione) within twenty-four months and that the measures taken to that end should conform to the adjustment programme (programma di adeguamento) drawn up by the Communications Regulatory Authority (Autorità per le garanzie nelle comunicazioni – AGCOM) in conjunction with the Ministry of Communications (“the Ministry”). It appears from the Consiglio di Stato’s judgment no. 2624 of 31 May 2008 (see paragraph 14 below) that, under the terms of the licence, the allocation of frequencies was deferred until such time as the authorities had adopted the adjustment programme, on the basis of which the applicant company should have upgraded its own installations. The adjustment programme should, in turn, have taken into account the requirements of the national frequency-allocation plan. However, the plan was not implemented. A succession of transitional schemes that benefited existing channels were applied at national level, with the result that, even though it had a licence, the applicant company was unable to broadcast until June 2009 as it had not been allocated any frequencies.
10.  The applicant company, through its statutory representative, made a number of applications to the administrative courts.
11.  In November 1999 the applicant company served formal notice on the Ministry to allocate frequencies to it. In a note of 22 December 1999, the Ministry refused its request.
12.  In 2000 the applicant company lodged an application with the Lazio Regional Administrative Court against the Ministry and RTI (a network of Italian television channels controlled by the Mediaset group), complaining that the authorities had not allocated it any broadcasting frequencies. The application was also directed against RTI because the Retequattro channel had been authorised to broadcast on frequencies that should have been transferred to the applicant company.
13.  On 16 September 2004 the Regional Administrative Court found in favour of the applicant company, holding that the authorities were required either to allocate the frequencies or to revoke the licence. Accordingly, it declared the note of 22 December 1999 void.
14.  RTI appealed to the Consiglio di Stato. In judgment no. 2624 of 31 May 2008, the Consiglio di Stato dismissed the appeal and upheld the Regional Administrative Court’s judgment. It noted that no deadline had been set in the licence for the authorities to adopt the adjustment programme drawn up by AGCOM in conjunction with the Ministry, but that the applicant company had been given twenty-four months to make improvements to its installations. Accordingly, the Consiglio di Stato found that the adjustment programme should have been approved promptly.
The Consiglio di Stato added that the Ministry had to give a decision on the applicant company’s request to be allocated frequencies, in accordance with a judgment delivered in the meantime by the European Court of Justice (ECJ – see paragraphs 33-36 below).
15.  On 23 October 2008 the applicant company, because it had still not obtained the frequencies, brought proceedings against the Ministry in the Consiglio di Stato, complaining that the judgment of 31 May 2008 had not been executed.
16.  On 11 December 2008 the Ministry extended the validity of the licence granted in 1999 until the analogue switch-off date and allocated Centro Europa 7 S.r.l. a single channel with effect from 30 June 2009.
17.  The Consiglio di Stato consequently held in judgment no. 243/09 of 20 January 2009 that the Ministry had properly executed its judgment of 31 May 2008.
18.  On 18 February 2009 the applicant company brought a further application in the Regional Administrative Court, arguing that the decree of 11 December 2008 by which the frequencies had been allocated was insufficient in that, contrary to the terms of the licence, it concerned a single channel that did not cover 80% of national territory. In its application the company sought the annulment of the decree and an award of damages.
19.  On 9 February 2010 the applicant company signed an agreement with the Ministry of Economic Development (the former Ministry of Communications), which undertook to assign to it additional frequencies in accordance with the terms of the licence.
20.  On 11 February 2010, pursuant to one of the clauses of that agreement, the applicant company asked for the proceedings pending before the Regional Administrative Court to be struck out.
21.  On 8 March 2011 the applicant company applied to the Regional Administrative Court to restore the case to its list. It sought the annulment of the decree of 11 December 2008 by which the frequencies had been allocated, and an award of damages. It argued that the administrative authorities had not complied fully with their obligation to allocate additional frequencies and had failed to observe the agreement of 9 February 2010 and the decision of 11 December 2008.
22.  Paragraph 6 of the agreement in question stated:
“Centro Europa 7 S.r.l. undertakes to request, by 11 February 2010, the striking out of application no. 1313/09 pending before the Lazio Regional Administrative Court, to allow it to lapse for failure to submit a fresh application to schedule a hearing within the statutory time-limit and, by the same date, to waive the claims for compensation brought in that application, provided that, by the date on which the case lapses, this agreement, the decision allocating the additional frequencies and the decision of 11 December 2008 have not in the meantime become invalid.
The Administration, for its part, undertakes to comply fully with its obligation to allocate additional frequencies, and with this agreement and the decision of 11 December 2008. Should it fail to do so, Centro Europa 7 and the opposing authorities shall regain full possession of their respective procedural prerogatives. In the event that the assignment of the additional frequencies becomes invalid, it is specified that Centro Europa 7 S.r.l. may reactivate application no. 1313/09 only if it would be impossible in this situation for Europa Way S.r.l. to operate one or more of the installations mentioned in Technical Attachment A.”
23.  The proceedings are currently pending before the Regional Administrative Court.
24.  In the meantime, on 27 November 2003, while its initial application was still pending before the Regional Administrative Court, the applicant company had lodged a further application with the same court, seeking in particular an acknowledgment of its entitlement to have the frequencies allocated and compensation for the damage sustained.
25.  In a judgment of 16 September 2004, the Regional Administrative Court dismissed the application, holding in particular that the applicant company had only a legitimate interest (interesse legittimo), that is, an individual position indirectly protected as far as was consistent with the public interest, and not a personal right (diritto soggettivo) to be allocated frequencies for analogue terrestrial television broadcasting.
26.  The applicant company appealed to the Consiglio di Stato, arguing that, since it had been granted a licence by the appropriate authorities, it did in fact have a personal right. In particular, it contended that Legislative Decree no. 352/2003 and Law no. 112/2004 did not comply with Community legislation (see paragraphs 65-67 below).
27.  On 19 April 2005 the Consiglio di Stato decided to restrict its examination to the applicant company’s claim for damages and not to rule at that stage on the request for allocation of frequencies.
28.  It nevertheless observed that the failure to allocate frequencies to Centro Europa 7 S.r.l. had been due to essentially legislative factors.
29.  It noted that section 3(2) of Law no. 249/1997 (see paragraph 58 below) enabled the “de facto occupants” of radio frequencies authorised to operate under the previous system to continue broadcasting until new licences were awarded or applications for new licences were rejected, and in any event not after 30 April 1998.
30.  It further noted that section 3(7) of Law no. 249/1997 (see paragraph 61 below) authorised the continuation of such broadcasts by entrusting AGCOM with the task of setting a deadline, on the sole condition that programmes were to be broadcast simultaneously on terrestrial frequencies and by satellite or cable. It pointed out that, in the event of failure by AGCOM to set a deadline, the Constitutional Court had set 31 December 2003 as the date by which programmes broadcast by the “over-quota channels” (that is, existing national television channels exceeding the concentration restrictions imposed by section 2(6) of Law no. 249/1997) were to be broadcast by satellite or cable only, with the result that the frequencies to be allocated to licence holders such as the applicant company would have been freed up. The Consiglio di Stato observed, however, that the deadline had not been complied with following the intervention of the national legislature: section 1 of Legislative Decree no. 352/2003, which had subsequently become Law no. 43/2004 (see paragraph 65 below), had prolonged the activities of the over-quota channels pending the completion of an AGCOM investigation into the development of digital television channels. It added that section 23(5) of Law no. 112/2004 (see paragraph 67 below) had subsequently, by a general authorisation mechanism, extended the possibility for over-quota channels to continue broadcasting on terrestrial frequencies until the national frequency-allocation plan for digital television was implemented, with the result that those channels had not been required to free up the frequencies intended for allocation to licence holders, such as the applicant company.
31.  Law no. 112/2004 had therefore had the effect, according to the Consiglio di Stato, of blocking the frequencies intended for allocation to holders of analogue licences and of preventing new operators from participating in digital television trials.
32.  That being so, the Consiglio di Stato decided to stay the proceedings and requested the ECJ to give a preliminary ruling on the interpretation of the provisions, in the EC Treaty, on freedom to provide services and competition, Directive 2002/21/EC (“the Framework Directive”), Directive 2002/20/EC (“the Authorisation Directive”), Directive 2002/77/EC (“the Competition Directive”) and Article 10 of the European Convention on Human Rights, in so far as Article 6 of the Treaty on European Union referred to it.
33.  On 31 January 2008 the ECJ gave judgment. It declared two questions inadmissible, holding that it did not have sufficient information to give a ruling on them.
34.  With regard to the question concerning Article 10 of the Convention, the ECJ concluded as follows:
“By its first question, the national court asks the Court, essentially, to state whether the provisions of Article 10 of the [Convention], in so far as Article 6 EU refers thereto, preclude, in television-broadcasting matters, national legislation the application of which makes it impossible for an operator holding rights, such as Centro Europa 7, to broadcast without the grant of broadcasting radio frequencies.
...
By those questions, the national court is thus seeking to determine whether there are infringements of Community law for the purpose of ruling on an application for compensation for the losses flowing from such infringements.
... Article 49 EC and, from the date on which they became applicable, Article 9 § 1 of the Framework Directive, Article 5 § 1, the second sub-paragraph of Article 5 § 2 and Article 7 § 3 of the Authorisation Directive and Article 4 of the Competition Directive must be interpreted as precluding, in television-broadcasting matters, national legislation the application of which makes it impossible for an operator holding rights to broadcast in the absence of broadcasting radio frequencies granted on the basis of objective, transparent, non-discriminatory and proportionate criteria.
That answer, by itself, thus enables the national court to rule on the application made by Centro Europa 7 for compensation for the losses suffered.
Consequently, regard being had to the Court’s answer to the second, fourth and fifth questions, it is not necessary to rule on the first and third questions.”
35.  As to the merits, the ECJ observed that the existing channels had been authorised to pursue their broadcasting activities as a result of a series of measures by the national legislature, to the detriment of new broadcasters which nevertheless held licences for terrestrial television broadcasting. It noted that these measures had entailed the successive application of transitional arrangements structured in favour of the incumbent networks, and that this had had the effect of preventing operators without broadcasting frequencies, such as the applicant company, from accessing the television-broadcasting market even though they had a licence (granted, in the applicant company’s case, in 1999). The ECJ held:
“... Law no. 112/2004 ... does not merely allocate to the incumbent operators a priority right to obtain radio frequencies, but reserves them that right exclusively, without restricting in time the privileged position assigned to those operators and without providing for any obligation to relinquish the radio frequencies in breach of the threshold after the transfer to digital television broadcasting.”
36.  The ECJ added that the application of the transitional schemes was not in accordance with the new common regulatory framework (NCRF), which implemented provisions of the EC Treaty, in particular those on freedom to provide services in the area of electronic communications networks and services. It observed in that connection that several provisions of the NCRF stated that the allocation and assignment of frequencies had to be based on objective, transparent, non-discriminatory and proportionate criteria. In the ECJ’s view, such criteria had not been applied in the present case, since the status of the existing channels had not been amended under the transitional schemes and they had continued their broadcasting activities to the detriment of operators such as the applicant company, which, because it had not been allocated any broadcasting frequencies, had been unable to exercise its rights and make use of its licence.
The ECJ therefore reached the following conclusions:
“... it must be stated that, in the area of television broadcasting, freedom to provide services, as enshrined in Article 49 EC and implemented in this area by the NCRF, requires not only the grant of broadcasting authorisations, but also the grant of broadcasting radio frequencies.
An operator cannot exercise effectively the rights which it derives from Community law in terms of access to the television-broadcasting market without broadcasting radio frequencies.
...
Article 49 EC and, from the date on which they became applicable, Article 9 § 1 of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive), Article 5 § 1, the second subparagraph of Article 5 § 2 and Article 7 § 3 of Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services (Authorisation Directive), and Article 4 of Commission Directive 2002/77/EC of 16 September 2002 on competition in the markets for electronic communications networks and services must be interpreted as precluding, in television-broadcasting matters, national legislation the application of which makes it impossible for an operator holding rights to broadcast in the absence of broadcasting radio frequencies granted on the basis of objective, transparent, non-discriminatory and proportionate criteria.”
37.  In decision no. 2622/08 of 31 May 2008, the Consiglio di Stato concluded that it could not allocate frequencies in the government’s place or compel the government to do so. It ordered the government to deal with the applicant company’s request for frequencies in a manner consistent with the criteria laid down by the ECJ. It made the following observations in particular:
“The adoption by the authorities of a specific measure relates more to issues of performance and implementation than to damages: in cases involving an unlawful refusal to take an administrative measure that has been requested, the adoption of the measure does not amount to compensation, but rather to the performance of an obligation incumbent upon the authorities, unless the private party concerned has sustained any damage.”
38.  With regard to the request for the allocation of frequencies, the Consiglio di Stato observed:
“Where legitimate interests are at stake, however, it is not possible to envisage a specific means of redress because inaction, a delay or an unlawful refusal will always have an impact on a situation that was or remains unsatisfactory, with the result that there is nothing to restore; the issue in relation to such interests concerns the practical implementation of any ruling setting aside the measure complained of.
...
Applying these principles to the present case, the Consiglio finds that the appellant’s request for an order requiring the authorities to allocate the network or frequencies is inadmissible.”
39.  The Consiglio di Stato deferred until 16 December 2008 its final decision on the payment of compensation to the applicant company, holding that it was necessary to wait for the relevant regulations to be passed by the government before assessing the amount.
40.  The Consiglio di Stato requested both parties to comply with the following requirements by 16 December 2008. The Ministry was, firstly, to specify what frequencies had been available following the public tendering procedures in 1999 and why they had not been allocated to the applicant company and, secondly, to justify its assertion that the licence granted to the applicant company had expired in 2005.
41.  The applicant company, for its part, was asked by the Consiglio di Stato to submit a report on its activities between 1999 and 2008, and also to explain why it had not taken part in the 2007 public tendering procedure for the allocation of frequencies.
42.  The Consiglio di Stato also asked AGCOM to explain why the national frequency-allocation plan for terrestrial television broadcasting had never been implemented. Lastly, it dismissed the applicant company’s request for the suspension of the provisional authorisation granted to a channel belonging to the Mediaset group (Retequattro) for the use of the frequencies.
43.  In its reply, AGCOM explained to the Consiglio di Stato that the national frequency-allocation plan had been implemented only on 13 November 2008. According to AGCOM, this delay was due to several factors. Firstly, the legal situation was complicated because it was difficult to identify the available broadcasting frequencies as a result of the court decisions in which the over-quota channels had been allowed to continue broadcasting. In addition, the transitional arrangements introduced by Law no. 66/2001 (see paragraphs 63-64 below), which had allowed the channels in question to continue broadcasting in analogue mode, had prevented the plan from being implemented on account of the incompatibility between the interests of the channels likely to be allowed to broadcast under the plan and the interests of the channels that were legally entitled to continue their existing operations.
44.  The applicant company submitted an expert valuation by the commercial bank Unipol assessing the damage sustained at 2,175,213,345.00 euros (EUR). The valuation was based on the profits achieved by Retequattro, the over-quota channel which should have relinquished the frequencies allocated to the applicant company.
45.  In a judgment of 20 January 2009, the Consiglio di Stato, on the basis of Article 2043 of the Civil Code (see paragraph 69 below), ordered the Ministry to pay the applicant company the sum of EUR 1,041,418 in compensation. It observed that, over a period of ten years, the Ministry had acted negligently by having granted Centro Europa 7 S.r.l. a licence without assigning it any broadcasting frequencies.
46.  The Consiglio di Stato found that there was a causal link between the conduct of the administrative authorities and the damage alleged, and that the award of the licence to Centro Europa 7 S.r.l. had not conferred on it the immediate right to pursue the corresponding economic activity; accordingly, the compensation should be calculated on the basis of the legitimate expectation of being allocated the frequencies by the appropriate authorities.
47.  In the opinion of the Consiglio di Stato, the fact that the frequencies had not been allocated until 11 December 2008 was attributable to the authorities. Damage had thus been sustained as a result of an unlawful act for which the authorities incurred non-contractual liability, concerning both the breach of legitimate expectations and the delay in allocating the frequencies. The fact that the authorities had launched a public tendering procedure for the frequencies in 1999, although the situation in the broadcasting sector had not been clarified and there were outstanding technical issues, had been “risky”. The Consiglio di Stato considered that the question of redress for the damage sustained by the applicant company should take this context into account. The authorities’ conduct had not been characterised by “significant gravity” (notevole gravità) and the unlawful act was thus attributable to “negligent” and not intentional conduct on their part.
48.  The Consiglio di Stato added that the pecuniary damage should be assessed with effect from 1 January 2004, since the Constitutional Court had ruled that the “transition period” after which legislation would have to be passed to allow licence holders to start broadcasting had expired on 31 December 2003 (see paragraph 62 below). As to the criteria for determining the damages to be awarded, the Consiglio di Stato pointed out that, as regards the losses sustained, the applicant company had been fully aware, at the time of the call for tenders, of the circumstances of the case and the conditions to which the licence was subject. Furthermore, the sequence of events that had prevented the frequencies from being allocated had been largely foreseeable. Accordingly, the applicant company should have known that it was unlikely to obtain the frequencies, at least in the short term. In addition, it could have purchased the frequencies under section 1 of Law no. 66/2001 (see paragraph 64 below).
Having regard to the above considerations, the Consiglio di Stato, without ordering an expert valuation, decided to award the applicant company EUR 391,418 for the losses sustained. As regards loss of earnings, it found that, from 1 January 2004, the applicant company could have achieved profits but had been unable to do so because of the delay in allocating the frequencies; the amount could be assessed at EUR 650,000. It refused to take into account the expert valuation submitted by the applicant company and held that it was unlikely that the company would have purchased shares in the market, even in the event that the over-quota channels had relinquished the frequencies. In the Consiglio di Stato’s view, the comparison between the applicant company and the two leading operators (Mediaset and RAI) was unjustified, especially as it did not take into account the other nationwide operator (La 7), which, although it had greater economic power than the applicant company, was nevertheless operating at a loss.